Self-employment activity in rural Canada

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Rural and Small Town Canada Analysis Bulletin Catalogue no. 21-006-XIE Vol.5, No. 5 (July 2004)

Self-employment activity in rural Canada

Valerie du Plessis, Statistics Canada

Introduction

Self-employed workers were in the news in the 1990s due to the rapid rise in their numbers and their substantial contribution to employment growth in Canada. From 1989 to 1996, annual increases in self-employment averaged 3.3 percent compared to average annual increases in paid employment of only 0.2 percent (Statistics Canada, 1997). Increases in self-employment

accounted for about 80 percent of net employment growth in Canada between 1989 and 1997 (Sunter, 1998; Manser and Picot, 1999). This upward trend ended in the year 2000, when the number of self-employed workers declined significantly (Bowlby, 2001). More recently, the number of self-employed Canadians has stabilised.

Highlights

♦ Rural self-employment workers represented 37 percent of all self-employed workers in Canada in 2001.

♦ The self-employment activity rate of workers in rural areas outside the commuting range of larger urban centres was more than double the urban rate in 2001.

♦ More workers in rural areas outside the commuting range of larger urban centres were engaged in non-farm self-employment activity than farm self-employment activity by 1996.

♦ Self-employment activity rates were higher among rural men than women but the gap narrowed between 1981 and 2001.

♦ About half of rural workers who were engaged in (unincorporated) self-employment activity relied on this source for at least three-quarters of their income in 2000.

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Rural and Small Town Canada Analysis Bulletin

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There is a debate among analysts about whether self-employment is a solution to problems of high unemployment or whether it is the job of last resort, the inevitable result of deeply rooted political and economic change. Some analysts have argued that increased self-employment is the result of workers’ personal choices or employers’ attempts to create more flexible firms. Others contend that workers have been forced into self-employment due to a decline in secure, full-time jobs (Hughes, 1999).

While this debate remains unresolved, we know from research on labour market trends in Canada that growth in self-employment from the mid-1970s to the end of the 1990s did not occur in isolation. Numerous other changes occurred at the same time, including a dramatic growth in women’s employment and the proliferation of other non-standard work arrangements such as multiple jobholding.

As women entered the workforce in greater numbers, the face of self-employment changed. During the 1980s and especially in the 1990s, self-employment grew faster for women than for men. By 1999, women’s share of self-employment was 35 percent, up from 26 percent in 1976 (Zukewich, 2000).

The link between multiple jobholding and self-employment has also strengthened. About one in every five moonlighters was self-employed in the first job, while two in five were self-employed in

the second job by 1997. Also, by 1997, the rate of multiple jobholding among women (6 percent) had surpassed that among men (5 percent). Whereas three-quarters of multiple jobholders were men in 1977, by the early 1990s roughly half were women (Sussman, 1998).

How important is self-employment activity in rural Canada?

While there are numerous studies profiling and analysing trends in self-employment at the national level, relatively little is known about rural / urban differences. This bulletin provides an initial look at self-employment activity in rural Canada by addressing the following questions:

• How important is self-employment activity in rural Canada?

• What are the differences in rates of self-employment activity between rural and urban workers?

• What are the differences among rural workers, including differences between men and women?

• How have these patterns changed over time?

The focus throughout is self-employment activity among workers, ages 20 to 64. This analysis is based on data from the Census of Population, 1981 to 2001. See Box 1 and Box 2 for a description of concepts and methodology and Appendix 1 for a discussion of data limitations.

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A substantial portion of Canada’s

self-employed workers are rural

Rural self-employed workers represented 37 percent of all self-employed workers (ages 20 to 64) in Canada in 2001. Those in small towns and rural areas outside the commuting zones of larger urban centres (i.e., in the rural and small town (RST) labour market) accounted for 27 percent of all self-employed in Canada (21.1 percent lived in RST rural areas and 5.9 percent lived in RST small towns) (Table 1). In addition, those living in rural areas within the commuting zone of larger urban centres (LUCs) accounted for 9.6 percent of all self-employed in Canada.

Table 1: Rural share of Canada's population and employment, 2001

All ages Total

Population All workers

Self-employed workers

(percent) (percent) (percent)

Three rural populations

RST rural 13.7 12.3 21.1 LUC rural 6.6 6.8 9.6 RST small town 6.9 6.2 5.9 Rural share 27.2 25.3 36.6 LUC urban 72.8 74.7 63.4 Canada 100.0 100.0 100.0

Note: See Boxes 1 and 2 for definitions.

Source: Statistics Canada, Census of Population, 2001.

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Box 1. Defining self-employment activity

Self-employment activity includes all workers who are self-employed in their main job as well as employees earning self-employment income from a farm, unincorporated business or professional practice outside their main job (refer to grey boxes in the diagram below). Those earning income from an incorporated business outside of their main job could not be included because this type of income is not itemised on the Census questionnaire.

Self-Employment Activity

Total Employment (all workers)

Employees Self-Employed Workers

reporting no

self-employment income

reporting self-employment income (net farm income or non-farm income from an unincorporated business, professional practice, etc.)

working owners of incorporated or unincorporated businesses, with or without paid help, and unpaid family workers

Self-employedworkers include working owners of incorporated or unincorporated businesses, with or without paid help, and individuals working without pay for a relative in a family business or farm. This is the definition of self-employed used by the Labour Force Survey.

Employees include individuals who work mainly for wages, salaries or commissions.

Main job refers to the job held in the week prior to enumeration, or the job of longest duration since January 1 of the preceding year, if a person was not working during the reference week. For a person with two or more jobs, the main job refers to the job where he or she worked the most hours.

¾ Measuring self-employment activity

This paper uses three indicators to compare the importance of self-employment activity among rural and urban workers:

Self-employment rate is the number of workers who are self-employed in their main job divided by all workers, multiplied by one hundred. This is a specific (or strict) measure of workers’ reliance on self-employment activity as a source of employment and only includes those who are self-employed in their main job.

Self-employment activity rate is thenumber of workers involved in self-employment activity divided by all workers, multiplied by one hundred. This group is broader by also including all employees earning unincorporated self-employment income outside their main job. It is an important overall measure given the recent rise in the number of multiple jobholders who are self-employed.

Proportion of workers with self-employment income for whom this income represented 75 percent or more of total income is the number of workers for whom income from a farm, unincorporated businessand / or professional practice represented 75 percent or more of total income divided by all workers with income from these sources, multiplied by one hundred. This is a relative measure of workers’ reliance on self-employment activity as a source of income.

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Box 2. Defining Rural

Several definitions of rural are available for national level analysis using the databases at Statistics Canada (du Plessis et al., 2001). Two of the more widely known definitions are:

Census rural areas: The residual of census urban areas, census rural areas include the population of Canada living outside places of 1,000 people or more or outside places with densities of 400 or more people per square kilometre. Taken together, census rural and census urban areas cover all of Canada (see Statistics Canada, 1999, for more details).

Rural and Small Town (RST): Labour market context is of primary importance when distinguishing

between who is “urban” and who is “rural” using the RST definition. RST refers to the population living outside the commuting zones of larger urban centres (Mendelson and Bollman, 1998:2).

Larger Urban Centre (LUC) refers to the combined populations living in Census Metropolitan Areas

(CMAs) and Census Agglomerations (CAs). A CMA has an urban core of 100,000 or over and includes all neighbouring municipalities where 50 percent or more of the work force commutes into the urban core. A CA has an urban core of 10,000 to 99,999 and includes all neighbouring municipalities where 50 percent or more of the work force commutes into the urban core (See Statistics Canada, 1999: 183-190, for more information on the delineation of CMAs and CAs).

The boundaries of census urban and census rural areas distinguish places with higher population sizes and densities from those with lower population sizes and densities. The boundaries dividing LUC and RST distinguish places with greater access to larger urban centres from those with less access. The first definition is based on the “form” of a place – population size and density – and the second on “function” – labour force commuting flows. Because they are delineated using different criteria, the boundaries of census rural areas do not respect those of RST areas. As a result, census rural areas exist both inside RST areas and inside CMAs and CAs.

By cross-classifying these two definitions at a national level it is possible to identify and compare three groups of rural populations (see grey boxes in the diagram below, and refer to Appendix 2 for examples of municipalities in each group):

Three Rural Populations

Canada Larger Urban Centre Labour Market = CMA + CA

Rural andSmall Town Labour Market = non-CMA/CA

LUC urban including urban core populations of 10,000+ and small towns (i.e. other urban areas, 1,000-9,999)

inside LUC commuting zone

LUCrural rural areas inside

LUC commuting zone

¸ lower population size and density

¸ greater access to larger urban centres

RSTsmall town small towns (i.e. urban areas, 1,000-9,999) outside LUC commuting zone

¸ higher population size and density

¸ less access to larger urban centres

RST rural rural areas outside

LUC commuting zone

¸ lower population size and density

¸ less access to larger urban centres

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RST rural workers have twice the rate

of self-employment activity, compared

to urban workers

There were 3.4 million rural workers representing 25 percent of all workers (ages 20 to 64) in Canada in 2001. About half were living in RST rural areas, just over a quarter were living in LUC rural areas and just under a quarter were living in RST small towns (Appendix 3, Table A).

Workers in each of the three rural groups engaged in self-employment activity in greater proportions than their urban counterparts (Figure 1). Self-employment activity rates (our broader indicator of self-employment – see Box 1) were particularly high within the RST rural group. In 2001, for

example, the self-employment activity rate among RST rural workers (28 percent) was more than double the LUC urban rate (13 percent) and well above the Canadian average (16 percent).

Despite differences in levels, the pattern of change in self-employment activity rates by rural / urban geography has generally followed the Canada average, with one exception. Self-employment activity rates declined in RST rural areas from 1981 to 1991, while the rates of other groups increased over this ten-year interval.

Self-employment rates (our stricter indicator of self-employment – see Box 1) followed a similar pattern, except their levels were somewhat lower (Appendix 3, Table B).

Figure 1. Rural workers participate in

self-employment activity at much

greater rates than their urban counterparts

0 5 10 15 20 25 30 35 1981 1986 1991 1996 2001 Self -empl o ym ent activity rate (ages 20 to 64) (pe rcent)

RST: rural RST: small town

LUC: rural LUC: urban

Canada

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Farm self-employment activity loses

ground to non-farm self-employment

activity in the 1990s

Declining rates in rural self-employment activity in the 1980s and the magnitude of rural / urban differences throughout the 1980s and 1990s can be explained, to a large extent, by trends in agriculture. Employment in agriculture has been declining due to economic and technological change in this industry. Since self-employment is common among farmers and farming is concentrated in the rural countryside, the impact of this decline is reflected the most in RST rural areas.

The incidence of farm self-employment activity is highest in RST rural areas (Appendix 3, Table B). When farm and non-farm rates for workers in these areas are considered separately, a new pattern emerges (Figure 2). From 1981 to 2001, there was a substantial decline in farm self-employment activity rates among RST rural workers. In contrast, non-farm rates remained fairly stable between 1981 and 1986 and then increased in the decade that followed. By 1996, more RST rural workers were engaged in non-farm self-employment activity (16 percent) than farm self-employment activity (13 percent).

Figure 2. More RST rural workers were engaged in

non-farm self-employment activity than

farm self-employment activity by 1996

0 5 10 15 20 25 30 35 1981 1986 1991 1996 2001 Self-e mpl o y m ent activity ra te (a ges 20 t o 64) (pe rcent) Farm Non-farm

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Rural workers in commuting range of

larger urban centres made the greatest

gains in non-farm self-employment

activity

When farm self-employment activity is excluded differences in rural and urban rates are much smaller, and the pattern of change for rates among workers in RST rural areas follows the Canadian average more closely (Figure 3).

The proportion of workers engaged in non-farm self-employment activity increased in all rural / urban areas at the national level from 1981 to 1996. The greatest gains were made between 1991 and 1996, a period that began during the 1990 to 1991 recession and ended following a period of incomplete economic recovery. The 1992 to 1996 recovery years were characterized by slow economic expansion with weak employment growth. Industries were restructuring in response to technological change,

increased competition and globalization. Many employers reduced their paid work force, and increased the amount of work that was outsourced or contracted out. Almost all of the growth in self-employment during this period was in own-account self-employment (i.e., self-employed workers who work on their own without paid employees) (Gauthier and Roy, 1997).

By 2001, non-farm self-employment activity rates (Figure 3) and non-farm self-employment rates (Appendix 3, Table B) had declined slightly over their 1996 levels. This change was anticipated by Gauthier and Roy (1997) when they observed that the share of self-employment in 1996 likely overstated the importance of self-employment in the Canadian economy. They explained that paid- employment, unlike self-employment, tends to be cyclical (falling during downturns in the economy and rising during recoveries). Consequently, in periods of weak employment growth like the early 1990’s, self-employment comprises an unsustainable proportion of net overall

Figure 3. Rural / urban differences in

self-employment activity rates are

much smaller when farming is excluded

0 2 4 6 8 10 12 14 16 18 20 1981 1986 1991 1996 2001 Non-fa rm self -emp loyment activit y r a te (ages 20 to 64) (per c e nt )

RST: rural RST: small town

LUC: rural LUC: urban

Canada

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employment (Gauthier and Roy, 1997, pp.12, 47). As anticipated, by 2001, following several years of stronger economic growth, the share of workers who were self-employed had levelled off as paid employment grew after the 1995-1996 slowdown.

Although non-farm self-employment activity rates in 2001 were slightly lower than in 1996, they remained high in comparison to two decades earlier. Among rural workers, the greatest increases, 1981 to 2001, were made by those living in the labour market of larger urban centres (i.e., in LUC rural areas). This is not surprising since these workers, by definition, live within commuting distance of an urban centre of 10,000 or more people. Compared to their RST counterparts, these workers are more integrated socially and economically with a nearby urban market. Potential advantages for self-employed workers include lower transportation costs delivering goods and services to these markets, lower costs communicating with nearby urban buyers and suppliers, and greater access to business and other support services that are concentrated in urban areas.

Self-employment activity rates are

higher among rural men than women

but the gap is narrowing

In all rural areas, farm and non-farm self-employment activity rates were higher among men than women. The same is true for self-employment rates. In 2001, the greatest difference between the rates of men and women were in RST rural areas, where the

self-employment activity rate among men (32.5 percent) was more than 11 percentage points higher than the corresponding rate among women (21.3 percent). Much of this difference was due to higher rates of farm self-employment activity among men compared to women (Appendix 3, Table C).

Between 1981 and 2001, the gap narrowed between self-employment activity rate of men and women in each of the three rural groups. The gap narrowed more among RST workers than for those in the LUC labour market (Figure 4). Among workers in rural areas of the RST labour market, the smaller difference in 2001 is attributable to a great extent to the downward trend in farm self-employment activity. Trends in the farming sector affect the rates of men more than women because, historically, more men than women have reported this occupation. Between 1981 and 2001, farm self-employment activity rates declined both for men and women in rural areas of the RST labour market; however, they declined more among men (down 8 percentage points) than women (down only 2.5 percentage points).

On the other hand, smaller male / female differences in 2001 among small town workers in the RST labour market were due more to increases in non-farm self-employment activity rates than to changes in farm rates. While non-farm rates increased for both men and women in these areas, they increased more among women (up by almost 5 percentage points) than among men (up by only 1 percentage point) (Appendix 3, Table C).

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Figure 4. Gap between self-employment activity rates of

men and women (ages 20 to 64) has narrowed

0 2 4 6 8 10 12 14 16 18 20

RST: rural LUC: rural Canada RST: small town LUC: urban P e rcent a g e point d if fer ence between

men and women

(i e. , S e lf-e mplo ym e n t activity r a te o f me n min u s self-e m p loy m en t a c tiv ity ra te of w o me n) 1981 2001

Source: Statistics Canada, Census of Population, 1981 and 2001.

-6.7

-3.2

-3.6

-4.2 -1.8

About half of rural workers with

(unincorporated) self-employment

income relied on this source for at least

three-quarters of all income

In each of the three rural groups, about half of the workers who reported earning unincorporated self-employment income relied on this source for at least 75 percent of their total income in 2000. This proportion was slightly higher among workers in the LUC labour market compared to workers in the RST labour market. Across all rural / urban groups, a greater proportion of men with unincorporated self-employment income than women relied on this source for at least three-quarters of their total income (Appendix 3: Table D).

In addition, there is a large and consistent difference between workers earning unincorporated self-employment income from

farm versus non-farm sources. Those in the farm group are much less likely to rely on unincorporated self-employment income for the main share of their income. In RST rural areas, only 39 percent of workers earning farm self-employment income from unincorporated sources rely on this income for three-quarters of more of their total income. This proportion is lower in LUC rural areas (33 percent) and RST small town areas (22 percent) where the incidence of farm self-employment activity is also much lower.

These findings indicate that unincorporated self-employment income is an important source of income for many rural workers. These findings also indicate that rural workers with unincorporated self-employment income often piece together their total income from more than one source. This is especially true for women and for those in the farming sector.

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Summary

Rural self-employed workers represent a substantial proportion of all self-employed workers in Canada. Overall rates of self-employment activity are much higher in rural compared to urban Canada. Differences within rural areas and differences between rural and urban areas are considerably smaller when farming is excluded.

During the past two decades, there has been a continuing decline in the proportion of workers involved in farm self-employment activity in the

rural countryside. Non-farm self-employment activity, on the other hand, is on the rise. More RST rural workers have been engaged in non-farm employment activity than in non-farm self-employment activity since the mid-1990s.

Among rural workers, self-employment activity represents an important source of employment and income. While farm and non-farm self-employment activity rates are higher among rural men than women, the gap is narrowing.

References

Bowlby, Geoff. (2002) “The labour market in 2001:

Year-end review.” Perspectives on Labour

and Income, Vol. 14, No. 2, Spring (Ottawa: Statistics Canada, Catalogue No. 75-001-XPE), pp. 9-19.

du Plessis, Valerie, Roland Beshiri, Ray D. Bollman and Heather Clemenson. (2001) “Definitions of

Rural.” Rural and Small Town Canada

Analysis Bulletin, Vol. 3, No. 3 (Ottawa: Statistics Canada, Catalogue no. 21-006-XIE). (www.statcan.ca/english/freepub/21-006-XIE/free.htm). du Plessis, Valerie. (2004) Trends in non-farm

self-employment activity for rural women. (Ottawa: Statistics Canada, Catalogue No. 21-601-MIE, No. 71, Agriculture and Rural Working Paper).

Gauthier, James and Richard Roy. (1997) Diverging Trends in Self-employment in Canada. (Ottawa: Applied Research Branch Strategic Policy, Human Resources Development Canada, Catalogue no. MP32-29/97-13E)

Hughes, Karen D. (1999) Gender and

Self-employment in Canada: Assessing Trends and Policy Implications (Ottawa: Canadian Policy Research Networks Inc, Study No. W104).

Keith, Barbara. (2003) “More than just farming: employment in agriculture and agri-food in rural

and urban Canada.” Rural and Small Town

Canada Analysis Bulletin Vol. 4, No. 8 (Ottawa: Statistics Canada, Catalogue no. 21-006-XIE) ( www.statcan.ca/english/freepub/21-006-XIE/free.htm).

Manser, Marilyn and Garnett Picot. (1999) “The Role of Self-employment in Job Creation in Canada and the United States,” Canadian Economic Observer, Vol. 12, No.3, March 1999 (Ottawa: Statistics Canada, Catalogue no. 11-010-XPB), pp.3.1-3.17.

Mendelson, Robert and Ray D. Bollman. (1998) “Rural and Small Town Population is

Growing in the 1990s,” Rural and Small

Town Canada Analysis Bulletin, Vol. 1, No.1 (Ottawa: Statistics Canada, Catalogue no. 21-006).

Statistics Canada. (1999) 1996 Census Dictionary (Ottawa: Statistics Canada, Catalogue no. 92-351-XPE).

Statistics Canada. (1997) “The Self-employed.” Labour Force Update, Autumn 1997, Vol.1, No.3 (Ottawa: Statistics Canada, Catalogue no. 71-005-XPB).

Sunter, Deborah (1998) “Canada—US Labour

Market Comparison,” Canadian Economic Observer, Vol. 11, No. 12, December 1998 (Ottawa: Statistics Canada, Catalogue no. 11-010-XPB), pp. 3.1-3.18.

Sussman, Deborah. (1998) “Moonlighting: A growing way of life,” Perspectives, Vol. 10, No. 2, Summer 1998 (Ottawa: Statistics Canada, Catalogue no. 75-001), pp.25-33.

Zukewich, Nancy (2000) “Paid and Unpaid Work,” in Women in Canada 2000: A gender-based statistical report, Chapter 5 (Ottawa: Statistic Canada, Catalogue no. 89-503-XPE).

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Appendix 1

Data limitations and note on age group

The data used in this study have certain limitations:

¾ Comparability with Labour Force Survey

Self-employment (in a person’s main job) tends to be under-reported on the Census of Population compared to the Labour Force Survey. Trained interviewers conduct the Labour Force Survey, while the Census uses a self-enumeration technique. Also, the Census, which includes questions of a much broader scope than the Labour Force Survey, dedicates fewer questions to verifying self-employment status.

Table A compares the self-employment rates using these two sources at the Canada level, based on monthly (unadjusted) data from the Labour Force Survey for the month corresponding to the reference week of the Census. This table

demonstrates that the self-employment rates generated using Census of Population data are consistently below those of the Labour Force Survey. It also demonstrates that both sources show an increase in each five-year interval, 1981 to 1996, with the greatest increase being between 1991 and 1996, and both sources show a small decrease, 1996 to 2001.

Thus, the self-employment rates shown in this report are likely lower than those that would be obtained using Labour Force Survey data. At the same time, we are confident that the overall message is the same.

The Census of Population was chosen as the data source for this study because it is based on a 20 percent sample of the Canadian population. With this sample size, detailed analysis between rural populations is possible. Also, it includes the “class of worker” and “sources of income” variables, both of which are used to calculate the self-employment activity rate.

Table A: Comparison of Census of Population and Labour Force Survey self-employment rates (ages 15 and older)

May-81 May-86 May-91 May-96 May-01 LFS (monthly, unadjusted) Total employed 11,400,900 12,050,200 12,959,600 13,566,800 15,226,400 Total self-employed 1,459,900 1,674,900 1,910,300 2,158,600 2,323,000 Self-employment rate 12.8 13.9 14.7 15.9 15.3 Census data Total employed 11,167,915 11,702,220 13,005,505 13,318,745 14,695,135 Total self-employed 1,147,795 1,269,510 1,430,420 1,825,555 1,878,875 Self-employment rate 10.3 10.8 11.0 13.7 12.8

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¾ Different reference periods for “class of worker” and “sources of income”

The Census data by "class of worker" refer to a respondent's job or business in the week prior to the Census of Population. The "sources of income" data are with reference to the previous year (January 1 to December 31).

Table B presents information on job tenure using monthly (unadjusted) data from the Labour Force Survey for the month corresponding to the reference week of the Census. This table demonstrates that, in each case, over 70 percent of workers held their job for 13 months or more and over 80 percent for 7 months or more. Since the Census of Population is conducted in May (month 5 of the calendar year), there is considerable overlap between those reporting self-employment in their “main job” in a May reference week and

those reporting self-employment income in the previous year.

This issue only affects the first of the three indicators used in this study (self-employment activity), which uses both the “class of worker” and “sources of income” data. In precise terms, this indicator provides a measure of those workers who were self-employed in their main job in the reference week of the Census of Population or who where employees in this reference week but earned income from self-employment activity in the previous year.

This issue does not affect the self-employment rate (which only uses class of worker data) or the measure of workers’ reliance on self-employment activity as a source of income (which only uses the sources of income data).

Table B: Job tenure of Canadian workers (ages 15 and older)

May-81 % May-86 % May-91 % May-96 % May-01 %

Total employment 11,499,700 100 12,161,200 100 12,959,600 100 13,566,800 100 15,226,400 100

employed 1-6 months 1,894,400 16 2,170,100 18 2,051,700 16 1,897,300 14 1,905,500 13

employed 7-12 months 1,258,200 11 1,177,300 10 1,201,400 9 1,200,300 9 1,570,200 10

employed 13-60 months 3,624,800 32 3,326,900 27 4,126,600 32 3,883,500 29 4,855,800 32

employed more than 60 months 4,722,300 41 5,486,900 45 5,580,000 43 6,585,600 49 6,895,000 45

Average (in months) 82.7 86.5 88.8 95.1 94.9 Source: Statistics Canada. Labour Force Survey (unadjusted, monthly data)

¾ Income from an incorporated business

Self-employed who are working owners of an incorporated business were included in this study if this was their main job. It was not possible to include those who earned income from an incorporated business outside their main job

because this information is not collected by the Census of Population. The Census of Population collects self-employment income in two categories only: net farm income and net non-farm income from an unincorporated business or professional practice.

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¾ Changes in rural / urban boundaries

The designation of CMAs and CAs is reviewed after each Census. This is also true for the designation of urban areas. New places may be designated as urban areas or CMA / CA urban cores as population sizes and densities change. Also, commuting patterns may change causing new municipalities to be included in the commuting zone of a CMA or CA. As a result of boundary changes between census years, it is not possible to analyze changes over time in the absolute number of rural self-employed – however, an analysis of proportions (such as the percent reporting self-employment) would be expected to be valid.

Conceptually, we are “holding constant” the type of labour market (in the case of the RST definition), and the population size/density form (in the case of the rural areas definition) even though particular areas are re-classified over time. Thus, we consider the intensity of self-employment within a constant type of labour market, or in the case of the rural areas definition within a constant population size / density form.

¾ Industrial classification: 2001 compared to

earlier years

Workers who are self-employed in their main job are grouped into either the farm or non-farm group using an industry variable in the Census database. For the Census years, 1986 to 1996, the industry split is based on the 1980 Standard Industrial Classification (SIC) codes, where “farm” includes the SIC groups 011 to 017 and

“non-farm” includes all other SIC groups. For 1981, the industry split is based on the 1970 SIC; however, this does not change the farm / non-farm roll-up. At the time of this study, the 1980 SIC codes were not available for the 2001 Census data. Instead, the 1997 North American Industry Classification System (NAICS) codes were used. Using the 1997 NAICS, “farm” includes NAICS groups 1 111 to 1 129 and “non-farm” includes all other NAICS groups.

Differences between the SIC and NAICS classification systems result in major discrepancies for certain components of the agriculture and agri-food sector. However, as demonstrated by Keith (2003), a successful comparison is possible between the SIC “primary agriculture sector” (1980 SIC groups 011 to 017) and the NAICS farm groups (1997 NAICS groups 111 to 112). The number of businesses classified as “farm” using the 1997 NAICS groups 111 to 112 is about 1% higher than those classified as “farm” using the 1980 SIC groups 011 to 017. For this reason, when comparing farm and non-farm self-employment, 1996 to 2001, we expect very little of the change to be due to differences in coding.

Note on age group selected for this study

The age group, 20 to 64, was selected for this study because this group tends to have a stronger attachment to the labour market than workers under 20 or over 64. This age group represented 92 percent of all workers, ages 15 and over, in Canada in 2001.

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Appendix 2

Examples of municipalities in each of the rural / urban group, 2001

Rural / urban

group Definitions that apply Examples

British Columbia Ontario Quebec Nova Scotia

LUC urban CMA / CA & Urban Area Vancouver Toronto Quebec New Glasgow

LUC rural CMA / CA & Rural Area Belcarra Milton Stoneham-et-Tewkesbury Westville

RST small town non-CMA / CA & Urban Area Nelson Arnprior Trois-Pistoles Yarmouth

RST rural non-CMA /CA & Rural Area Harrison Hot Springs Erin Sainte-Adèle Lockeport

Source: Statistics Canada, 2001 Census of Population, Geosuite, Catalogue no. 92F0150XCB.

Appendix 3 – Supporting tables

Table A: Distribution of Canada's population and workers by rural / urban geography, 2001

Total Share of Canada total Share of rural

total All workers

Share of Canada total Share of rural total Employees in main job Share of Canada total Share of rural total Self-employed in main job Share of Canada total Share of rural total

(percent) (percent) (percent) (percent) (percent) (percent) (percent) (percent)

Three rural populations2 RST rural 4,110,679 13.7 50.4 1,660,390 12.3 48.5 1,298,420 11.0 46.4 361,970 21.1 57.8 LUC rural 1,988,204 6.6 24.4 922,080 6.8 26.9 758,290 6.4 27.1 163,790 9.6 26.1 RST small town 2,057,329 6.9 25.2 839,890 6.2 24.5 739,300 6.3 26.4 100,590 5.9 16.1 Rural subtotal 8,156,212 27.2 100.0 3,422,360 25.3 100.0 2,796,010 23.7 100.0 626,350 36.6 100.0 LUC urban 21,850,882 72.8 … 10,099,330 74.7 … 9,013,625 76.3 … 1,085,705 63.4 … Canada 30,007,094 100.0 … 13,521,690 100.0 … 11,809,635 100.0 … 1,712,055 100.0 …

Notes: 1 See Box 1 for definitions of employees and self-employed workers 2

See Box 2 for rural / urban definitions … Not applicable

Population(all ages) Workers1

(ages 20 to 64)

Table B: Self-employment activity rates of Canadian workers, ages 20 to 64, by rural / urban geography, 1981 to 2001

1981 1986 1991 1996 2001

Total Non-farm Farm Total Non-farm Farm Total Non-farm Farm Total Non-farm Farm Total Non-farm Farm

(percent)

Canada

Self-employment activity rate 13.5 10.0 3.7 13.9 10.7 3.3 14.3 11.6 2.8 17.0 14.3 2.7 15.9 13.5 2.4 Self-employment rate 10.5 7.9 2.6 10.8 8.4 2.4 10.9 9.0 1.9 13.5 11.9 1.6 12.7 11.3 1.3

LUC: urban

LUC: rural

RST: small town

RST: rural

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Table C: Self-employment activity rates for employed men and women,

2001 Men Women Percentage point difference

Total Non-farm Farm Total Non-farm Farm Total Non-farm Farm

Canada

Self-employment activity rate 18.8 15.9 3.0 12.5 10.9 1.7 6.3 5.0 1.3 Self-employment rate 15.3 13.6 1.8 9.6 8.7 0.9 5.7 4.8 0.9

LUC: urban

LUC: rural

RST: small town

RST: rural

1981 Men Women Percentage point difference

Total Non-farm Farm Total Non-farm Farm Total Non-farm Farm

Canada

LUC: urban

LUC: rural

RST: small town

RST: rural

Note: See Boxes 1 and 2 for defintiions.

Source: Statistics Canada, Census of Population, 1981 and 2001.

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Table D: Importance of self-employment activities as income source, 2000

Proportion of workers (ages 20 to 64) with unincorporated self-employment income for whom this income represented 75% or more of total income

Total Men Women

Canada

….Total 53.8 57.6 47.8

…….. With non-farm self-employment income 56.9 61.6 49.9

…….. With farm self-employment income 34.1 36.0 30.3

LUC: urban

….Total 55.9 60.5 49.3

LUC: rural

….Total 52.7 55.4 47.9

RST: small town

….Total 50.8 54.2 46.3

RST: rural

….Total 49.3 52.3 43.3

Valerie du Plessis is an analyst in Housing, Family and Social Statistics Division. She prepared this bulletin when she worked in the Research and Rural Data

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Rural and Small Town Canada Analysis Bulletins (Cat. no. 21-006-XIE)

Volume 1

No. 1: Rural and Small Town Population is Growing in the 1990s

Robert Mendelson and Ray D. Bollman

No. 2: Employment Patterns in the Non-Metro Workforce

Robert Mendelson

No. 3: The Composition of Business Establishments in Smaller and Larger Communities in Canada

Robert Mendelson

No. 4: Rural and Urban Household Expenditure Patterns for 1996

Jeff Marshall and Ray D. Bollman

No. 5: How Far to the Nearest Physician?

Edward Ng, Russell Wilkins, Jason Pole and Owen B. Adams

No. 6: Factors Associated with Local Economic Growth

Ray D. Bollman

No. 7: Computer Use and Internet Use by Members of Rural Households

Margaret Thompson-James

No. 8: Geographical Patterns of Socio-Economic Well-Being of First Nations Communities

Robin P. Armstrong Volume 2

No. 1: Factors Associated with Female Employment Rates in Rural and Small Town Canada

Esperanza Vera-Toscano, Euan Phimister and Alfons Weersink

No. 2: Population Structure and Change in Predominantly Rural Regions

Roland Beshiri and Ray D. Bollman

No. 3: Rural Youth Migration Between 1971 and 1996

Juno Tremblay

No. 4: Housing Conditions in Predominantly Rural Regions

Carlo Rupnik, Juno Tremblay and Ray D. Bollman

No. 5: Measuring Economic Well-Being of Rural Canadians Using Income Indicators

Carlo Rupnik, Margaret Thompson-James and Ray D. Bollman

No. 6: Employment Structure and Growth in Rural and Small Town Canada: An Overview

Roland Beshiri

No. 7: Employment Structure and Growth in Rural and Small Town Canada: The Primary Sector

Roland Beshiri

No. 8: Employment Structure and Growth in Rural and Small Town Canada: The Manufacturing Sector

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Rural and Small Town Canada Analysis Bulletins (Cat. no. 21-006-XIE)

(continued) Volume 3

No. 1: Employment Structure and Growth in Rural and Small Town Canada: The Producer Services Sector

Roland Beshiri

No. 2: Urban Consumption of Agricultural Land

Nancy Hofmann

No. 3: Definitions of Rural

Valerie du Plessis et al

No. 4: Employment in Rural and Small Town Canada: An Update to 2000

Neil Rothwell

No. 5: Information and Communication Technologies in Rural Canada

Louise McLaren

No. 6: Migration To and From Rural and Small Town Canada

Neil Rothwell et al

No. 7: Rural Income Disparities in Canada: A Comparison Across the Provinces

Vik Singh

No. 8: Seasonal Variation in Rural Employment

Neil Rothwell Volume 4

No. 1: Part-time Employment in Rural Canada

Justin Curto and Neil Rothwell

No. 2: Immigrants in Rural Canada

Roland Beshiri and Emily Alfred

No. 3: The Gender Balance of Employment in Rural and Small Town Canada

Justin Curto and Neil Rothwell

No. 4: The Rural / Urban Divide is not Changing: Income Disparities Persist

Alessandro Alasia and Neil Rothwell

No. 5: Rural and Urban Educational Attainment: An Investigation of Patterns and Trends, 1981-1996

Alessandro Alasia

No. 6: The Health of Rural Canadians: A Rural-Urban Comparison of Health Indicators

Verna Mitura and Ray Bollman

No. 7: Rural Economic Diversification – A Community and Regional Approach

Marjorie Page and Roland Beshiri

No. 8: More Than Just Farming: Employment in Agriculture and Agri-Food in Rural and Urban Canada

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Rural and Small Town Canada Analysis Bulletins (Cat. no. 21-006-XIE)

(end) Volume 5

No. 1: Factors Associated with Household Internet Use

Vik Singh

No. 2: Mapping the Socio-economic Diversity of Rural Canada

Alessandro Alasia

No. 3: Health Status and Behaviours of Canada’s Youth: A Rural-Urban Comparison

Verna Mitura and Ray D. Bollman

No. 4: Immigrants in Rural Canada: 2001 Update